ESG Trends for 2024: Business Specific Insights

Posted by ESGmark on 1st February 2024 -

In the fast-moving world of innovation, technology, and Artificial Intelligence (AI), business also moves fast. In the first part of a series of two blogs, we addressed global ESG trends for 2024 and touched upon themes such as the energy transition, and climate-positive technologies. 

In this second blog, we dive into the world of business and the private sector: ESG has been dominating corporate strategy meetings and investment portfolios for years now, and below are the trends we expect to see in 2024. 

Rise of G: ESG as business strategy 

As the relationship between business value and sustainability is crystallising, environmental and social objectives are becoming more integrated with business strategies rather than being seen as additions to core business. Thomson Reuters’ 2023 report found that 71% of people agree that the role of ESG in corporate performance will grow in the future, and CFOs are increasingly finding the topic of sustainability in their remit of work as it forms an important factor in long-term value and performance. 

Much of this shift towards an integrated approach to corporate responsibility comes down to increasing ESG regulation, building resilience to climate change impacts, and nurturing stakeholder trust. In 2024, consumers, employees, and investors will continue to place more importance on corporate responsibility and impact than ever, and strategies for bettering impact are unlikely to be successful unless they are ingrained rather than peripheral to corporate governance.  

Increasing mandatory disclosures and ESG reporting 

Voluntary disclosure of ESG practices and the lack of standardisation has meant that ESG reporting is inconsistent across and between sectors and can be superficial. This makes industry benchmarking difficult, and is also confusing for consumers. Stakeholder expectations are driving greater demand for mandatory reporting of business practices and performance relating to environmental, social, and financial impact. 

ESG regulation remains a mixed landscape, however, in 2024 we will see an overall continued rise in regulation and compulsory reporting. Some of the emerging regulations to look out for in 2024 include the European Parliament’s Corporate Sustainability Reporting Directive (CSRD), the introduction of a sustainability disclosure and labelling regime for FCA regulated firms, and progress on the UK Sustainability Disclosure Standards (UK SDS). 

Crackdown on greenwashing 

Speaking of compulsory disclosure, as companies realise that they must show consumers and other stakeholders that they care about their impact, the battle against greenwashing intensifies. The EU is cracking down on misleading green claims, recently voting to ban carbon offsetting as justification for using terms such as “climate neutral”.  

Similarly in the UK, we are now seeing more focus on green claims made in the fast-moving consumer goods sector through the Competition and Markets Authority’s (CMA) enforcement of the Green Claims Code (GCC). The CMA is cracking down on vague and misleading statements, exaggeration and generalisation of ‘green’ claims, unclear recycling information, and more recently, the misleading use of ‘natural’ colours and imagery. 

For help navigating the Green Claims Code, head to our guide here. 

Wellbeing in the workplace 

In their 2023 State of the Global Workplace Report, Gallup found that over half of employees are job seeking – either passively or actively. The top three factors that prospects are looking for in their next job are increased pay, improved wellbeing, and opportunities to grow and develop. Work culture and engagement was the area where the largest group of respondents said they would want to see change in their workplace, followed by pay and then wellbeing. This mirrors the trend of ‘quiet quitting’ which has been increasing post-pandemic, a term describing the psychological disengagement with work which is often caused by employees not feeling valued at work or not feeling value in their work. So, if we want to see our best employees retained, we will see a shift towards focus on wellbeing and the bettering of company culture. 

Sustainability roles and internal buy-in 

Similarly, environmental responsibility is increasingly important to employees and candidates, whether they are seeking a sustainability role or not. In fact, a 2023 study by Deloitte showed that over half of Gen Z and Millennials have researched a company’s environmental impact and policies before accepting job offers. 17% of Gen Z and 16% of millennials have switched jobs in favour of a career that matches their values, and 25% of Gen Z and 23% of millennials plan to make the switch in the future. 

This can be a major positive for corporate social and environmental action for businesses who lean into this growing trend, as it will mean they can benefit from internal buy-in of their policies. Tying back to good governance, it is therefore important to communicate your ESG strategy and impact throughout your organisation as well as externally, and support bottom-up engagement and employee-led initiatives. 

 2024 will be an exciting year for those looking to understand ESG in business better. With governance taking centre stage, we will see companies integrating ESG into their core business, and into their strategy to attract and retain talent. Increasing regulation will start to bring some long-sought-after clarity into the ESG reporting scene, and at a time when consumers and employees-to-be scrutinise corporate social and environmental impact ever more – alongside a rising concern with workplace wellbeing.